Review of EPY4 Total Resource Cost Test Assumptions. April 7, 2014

Transcription

1 Review of EPY4 Total Resource Cost Test Assumptions Energy Efficiency / Demand Response Plan: Plan Year 4 (6/1/2011-5/31/2012) Presented to Commonwealth Edison Company April 7, 2014 Prepared by: Greg Brown Navigant Robert Neumann Navigant Navigant Consulting, Inc.

2 Submitted to: ComEd Three Lincoln Centre Oakbrook Terrace, IL Submitted by: Navigant Consulting, Inc. 30 S. Wacker Drive, Suite 3100 Chicago, IL Contact: Randy Gunn, Managing Director Jeff Erickson, Director Disclaimer: This report was prepared by Navigant Consulting, Inc. ( Navigant ) for ComEd based upon information provided by ComEd and from other sources. Use of this report by any other party for whatever purpose should not, and does not, absolve such party from using due diligence in verifying the report s contents. Neither Navigant nor any of its subsidiaries or affiliates assumes any liability or duty of care to such parties, and hereby disclaims any such liability. PY4 Total Resource Cost Test Assumptions - Final Page i

3 Table of Contents 1. Overview IL TRC Equation TRC Data Requirements Summary of Results & Generic Data Points Present Summary of Portfolio Benefits and Costs Generic Data Points Avoided Electric Production costs ($/MWh) Avoided Electric Capacity costs ($/kw) Avoided T&D Electric ($/kw) Avoided Ancillary ($/kw) Admin Costs Implementation Costs EM&V / Outreach / Advertising Incentives Net Participant Costs Discount Rate Line Losses Program Specific Data Present Summary of Program Benefits and Costs Discrepancies between Evaluated and DSMore Ex-Post Net Energy Savings Program Specific Data Review Residential Lighting Program Fridge Freezer Recycle Rewards Program Clothes Washer Rebate Program Joint Residential Multi-family All Electric Single Family Home Performance Elementary Education Program The Central Air Conditioning Efficiency Services (CACES) Home Energy Report Complete System Replacement C&I Prescriptive Program C&I Custom Program Midstream Lighting Program C&I Retro Commissioning Program Small Business Program C&I New Construction Program Data Centers Compressed Air Program PY4 Total Resource Cost Test Assumptions - Final Page ii

4 List of Figures and Tables Figure 1 Summary of Portfolio Level Benefits and Costs... 5 Table 1 Data points needed to conduct TRC... 3 Table 2 Summary of Portfolio Level Costs and Benefits ($ in 000 s)... 4 Table 3 - Summary of Generic Data Points Used for TRC... 6 Table 4 - Summary of Program Level Benefits and Costs ($ in 000 s)... 9 Table 5 - Navigant Evaluated vs. DSMore Implied Ex-Post Net Savings (MWh) Table 6 - TRC Components for Residential Lighting Program ($ in 000 s) Table 7 - IL TRC Components for Fridge Freezer Recycle Rewards ($ in 000 s) Table 8 - IL TRC Components for Clothes Washer Rebate Program ($ in 000 s) Table 9 - IL TRC Components for Residential Multi-Family Joint Program ($ in 000 s) Table 10 - IL TRC Components for Single Family Joint Program ($ in 000 s) Table 11 IL TRC Components for Elementary Education Program ($ in 000 s) Table 12 - IL TRC Components for CACES Program ($ in 000 s) Table 13 - IL TRC Components for Home Energy Report ($ in 000 s) Table 14 - TRC Components for Complete System Replacement Program ($ in 000 s) Table 15 - IL TRC Components for C&I Prescriptive Program ($ in 000 s) Table 16 - IL TRC Components for C&I Custom Program ($ in 000 s) Table 17 - TRC Components for Midstream Lighting Program ($ in 000 s) Table 18 - IL TRC Components for C&I Retro Commissioning Program ($ in 000 s) Table 19 - IL TRC Components for Small Business Program ($ in 000 s) Table 20 - IL TRC Components for C&I New Construction Program ($ in 000 s) Table 21 - TRC Components for Data Centers ($ in 000 s) Table 22 - TRC Components for Compressed Air Program ($ in 000 s) PY4 Total Resource Cost Test Assumptions - Final Page iii

5 1. Overview As part of Navigant s evaluation of Commonwealth Edison Company s (ComEd) energy efficiency and demand response programs for program year four we reviewed the outputs of DSMore, an excel based tool, that calculates program level cost effectiveness for various tests, including the Utility, Ratepayer Impact Measure (RIM), Participant, Total Resource Cost (TRC) and Societal tests. The focus of this review is on the basis and reasonableness of the assumptions used to conduct the Illinois TRC test. The Illinois TRC test is defined in the Illinois Power Agency Act SB1592 as follows: Total resource cost test or TRC test means a standard that is met if, for an investment in energy efficiency or demand-response measures, the benefit-cost ratio is greater than one. The benefitcost ratio is the ratio of the net present value of the total benefits of the program to the net present value of the total costs as calculated over the lifetime of the measures. A total resource cost test compares the sum of avoided electric utility costs, representing the benefits that accrue to the system and the participant in the delivery of those efficiency measures, to the sum of all incremental costs of end-use measures that are implemented due to the program (including both utility and participant contributions), plus costs to administer, deliver, and evaluate each demand-side program, to quantify the net savings obtained by substituting the demand-side program for supply resources. In calculating avoided costs of power and energy that an electric utility would otherwise have had to acquire, reasonable estimates shall be included of financial costs likely to be imposed by future regulations and legislation on emissions of greenhouse gases. 1 The Illinois TRC test differs from traditional TRC tests in its requirement to include a reasonable estimate of the financial costs associated with future regulations and legislation on the emissions of greenhouse gases (GHG). This difference adds an additional benefit to investments in efficiency programs that are typically included in the Societal Test in other jurisdictions. However, the Illinois TRC test differs from the Societal test in that it only includes benefits associated with avoided GHGs and the discount rate applied to future benefits is the electric distribution companies (EDCs) Weighted Average Cost of Capital (WACC) which is typically used for in TRC calculations. 1.1 IL TRC Equation The equation used to calculate the Illinois TRC is presented below: Equation 1 Illinois TRC BCRILTRC = BILTRC / CILTRC 1 Illinois Power Agency Act SB1592, pages 7-8. PY4 Total Resource Cost Test Assumptions - Final Page 1

6 Where, BCRILTRC = Benefit-cost ratio of the Illinois total resource cost test BILTRC = Benefits of a Illinois program or portfolio CILTRC = Costs of a Illinois program or portfolio The benefits of the Illinois TRC are calculated using the following equation: Equation 2 IL TRC Benefits B ILTRC UAEP UATD UAA EB N N t t t t t 1 t 1 (1 d) t 1 UAC at (1 d) PAC t 1 at The costs of the Illinois TRC are calculated using the following equation: C ILTRC N t 1 Equation 3 - IL TRC Costs PRC t PIC t PEAM (1 d) t t 1 PCN t UIC t Where benefits are defined as: UAEPt UATDt UAAt EBt UACat PACat = Utility avoided electric production costs in year t = Utility avoided transmission and distribution costs in year t = Utility avoided ancillary costs in year t = Environmental Benefits in year t = Utility avoided supply costs for the alternate fuel in year t = Participant avoided costs in year t for alternate fuel devices And costs are defined as: PRCt PICt PEAMt PCN UICt = Program Administrator program costs in year t = Program Implementation costs in year t = Program Evaluation, Measurement & Verification (EM&V), Advertising and Miscellaneous costs in year t = Net Participant costs = Utility increased supply costs in year t 1.2 TRC Data Requirements The data points needed to conduct the Illinois TRC test are provided in Table 1 below and are divided into generic and program specific categories. The program specific data points are further subdivided into those that are provided by ComEd versus those that are a result of the Navigant s evaluation activities. PY4 Total Resource Cost Test Assumptions - Final Page 2

7 Table 1 Data points needed to conduct TRC Category Data Point Source Avoided energy costs ($/kwh) Avoided capacity costs ($/kw) Generic ComEd Discount Rate Line Losses Escalation Rates CO2 costs Participants Verified Ex-Ante Energy Savings (kwh) Verified Ex-Ante Capacity Navigant Savings (kw) Realization Rate Program Specific Net to Gross Ratio Measure life Implementation Costs Utility Admin Costs ComEd Utility Incentive Costs Participant Costs This document provides a summary of the results at the portfolio and program level, the program specific inputs, a description of each of the data points provided by ComEd, the basis of their determination and their reasonableness. PY4 Total Resource Cost Test Assumptions - Final Page 3

8 2. Summary of Results & Generic Data Points 2.1 Present Summary of Portfolio Benefits and Costs A summary of the portfolio level results, separated by benefits and cost components, is presented in Table 2 and Figure 1 below. Avoided Electric Production Table 2 Summary of Portfolio Level Costs and Benefits ($ in 000 s) UCT Test TRC Test IL TRC Test UCT Benefits UCT Costs TRC Benefits TRC Costs IL TRC Benefits 214, , ,545 Avoided Electric Capacity 29,406 29,406 29,406 Avoided Gas Production Avoided Gas Capacity Avoided T&D Electric 7,878 7,878 7,878 Avoided Ancillary 6,468 6,468 6,468 Reduced Arrears 4,395 4,395 4,395 NPV of Avoided Replacement Costs 51,691 51,691 51,691 IL TRC Costs Administration Costs 8,844 8,844 8,844 Implementation Costs 34,576 34,576 34,576 EM&V / Outreach / Advertising 8,357 8,357 8,357 Incentives 57, Net Participant Costs - 106, ,145 Present Totals 315, , , , , ,922 Ratio PY4 Total Resource Cost Test Assumptions - Final Page 4

9 Figure 1 Summary of Portfolio Level Benefits and Costs As shown in Figure 1, the majority of the benefits in the UCT and TRC tests are derived from avoided electric production and capacity costs, followed by avoided ancillary costs and finally avoided T&D costs. For the comparison to the standard TRC test shown above, an adder included in the value of avoided electric production after Year 3 to account for CO2 impacts has been removed. On the cost side, net participant costs represent the largest component followed by implementation, EM&V / outreach / advertising and administration costs in the IL TRC test. 2.2 Generic Data Points Table 3 shows the typical values for the generic data points used in the IL TRC calculation and is followed by a description of what each of the components used in the TRC calculation represents. PY4 Total Resource Cost Test Assumptions - Final Page 5

10 Table 3 - Summary of Generic Data Points Used for TRC Data Point Avoided Electric Production ($/MWh) $56.89 Avoided Electric Capacity ($/kw) $6.18 Avoided T&D ($/kw) $9.55 Avoided Ancillary ($/kw) $ Discount Rate (Utility WACC %) 7.54% Line Losses (%) 9.08% CO2 Benefits ($/MWh) $ Avoided Electric Production costs ($/MWh) Avoided electric production costs are those associated with purchasing energy from PJM. As per ComEd, avoided energy costs are based on NYMEX ATC for NI-Hub for the first 3 years. Future years are estimated and include the environmental benefits deriving from the expected impacts of CO2. 2 ComEd does not typically use a single value for avoided electric production costs. The DSMore model calculates electric production costs under a wide variety of scenarios. The value included above is a weighted average of the probability of each scenario occurring. 2.4 Avoided Electric Capacity costs ($/kw) Avoided electric capacity costs are those associated with the construction of addition electricity generation facilities to meet peak demand. Incremental reductions in the amount of electricity demand during peak hours can delay or eliminate the need to build additional generation. ComEd is a participant in the Reliability Pricing Model ( RPM ), which is PJM s forward capacity market. The DSMore model uses actual RPM clearing prices for avoided demand costs through the 2013 program year (PY6). This is a reasonable approach for valuing avoided electric capacity. 2.5 Avoided T&D Electric ($/kw) Avoided transmission and distribution (T&D) costs is a benefit associated with not needing to build transmission and distribution infrastructure to meet demand at peak times. 2.6 Avoided Ancillary ($/kw) Avoided Ancillary is a benefit associated with avoided costs attributable to the Open Access Transmission Tariff (OATT) that EDCs participating in the PJM market are required to pay based on demand. 2 The primary environmental benefit that could be included in the Illinois TRC test is the value of avoided CO2 emissions. For avoided costs in the PY4 analysis, years beyond NYMEX s view of the NI-Hub use the Annual Energy Outlook 2012, $15/tonne carbon scenario to incorporate CO2 impacts in the price estimates. This is a difference from the TRC analysis performed in prior years when the CO2 adder was a singular impact fixed across time. Adding expected CO2 impacts to the price curve allows it to escalate similarly with the underlying electric pricing. PY4 Total Resource Cost Test Assumptions - Final Page 6

11 2.7 Admin Costs These are ComEd s internal staff costs for administering these programs. 2.8 Implementation Costs These are the costs associated with the implementation of the programs, typically paid to a third party to deliver the program. 2.9 EM&V / Outreach / Advertising These are costs are associated with evaluating the ComEd portfolio, outreach activities as well as advertising such as general energy efficiency promotion and its associated environmental benefits Incentives The incentives are paid either to program participants and are shown above, but not included in the calculation of costs in the TRC test Net Participant Costs Participant costs are the costs that participants pay as a result of participating in an energy efficiency program. They are calculated from the perspective of what would the participant have paid in absence of the program. The gross participant costs are multiplied by the net-to-gross (NTG) ratio to determine the net participant costs which is the amount that is used in the calculation of the TRC test Discount Rate Not included in Table 2 above, the discount rate is an important determinant of overall cost effectiveness. The avoided electric production, capacity T&D, and ancillary benefits accrue over the life of the measures included in each program. These benefits are discounted to determine the present value of the cumulative benefits. The discount rate used of 7.54% reflects ComEd s weighted average cost of capital (WACC) and is appropriate rate to use for the Total Resource Cost (TRC) Test or the Rate Payer Impact Measure (RIM) Test. The discount rate for the Societal Test is typically lower than the rate used in the TRC test. The Societal test is like the TRC except that it adds additional non-traditional benefits, like avoided environmental benefits, and the discount rate used is a societal discount rate, which is typically lower than a utility WACC. The same discount rate of 7.54% was utilized in the Societal test in this instance, which may represent a low valuation of accrued and benefits over the life of the measures included in each program Line Losses Also not included in Table 2, line losses are important to incorporate in the calculation of total benefits. The energy and demand savings included in the evaluations are estimated at the customer or meter level. The savings that accrue to ComEd rate payers are those at the generator level and therefore the estimated savings are increased by the line losses within ComEd s transmission and distribution network. PY4 Total Resource Cost Test Assumptions - Final Page 7

12 The line losses of 9.08% are based on ComEd s internal analysis and were included in the three year plan filed with and approved by the commission. These line losses are in the higher end of the range that Navigant has seen, but are reasonable. PY4 Total Resource Cost Test Assumptions - Final Page 8

13 3. Program Specific Data 3.1 Present Summary of Program Benefits and Costs Table 4 - Summary of Program Level Benefits and Costs ($ in 000 s) Program Benefits Costs IL TRC Avoided Avoided Other Avoided Avoided Admin Implementation EM&V/ Incentives 3 Participant IL TRC IL TRC IL TRC Test Electric Electric T&D Ancillary Costs Outreach/ Costs (Net) Benefits Costs Production Capacity Costs Advertise Residential Lighting 42,980 4,290 50,778 1,819 1, , ,769 18, ,695 21, Fridge & Freezer Recycle 19,012 3, ,312 1,854 2,039-23,357 6, Clothes Washer Rebates ,222* ,610 1,455 6,294 1, Multi-Family 1, , , Single Family Elementary Ed CACES , ,304 1, Home Energy Report 2, , ,612 2, Complete System Replacement Business Prescriptive 89,570 14,149-3,112 2, ,065 4,247 24,442 72, ,351 84, Business Custom 8, ,612 7,941 10,329 8, Midstream Lighting 5, , ,139 1, Retro-Commissioning , , ,882 2, Small Business 3, , ,890 1, C&I New Construction 3, ,702 1,136 5,012 2, Data Centers Compressed Air 1, ,285 1,576 2, Portfolio, Carryover & RLD 3 rd Party 29,494 3, ,230 11, ,406 18, Total 214,545 29,405 56,914 7,877 6,467 8,848 34,574 8,357 57, , , , ComEd Summary 214,545 29,405 56,914 7,877 6,467 8,848 34,574 8,357 57, , , , Delta ; * - Avoided Gas production, capacity, and water arrears; NPV of replacement costs 3 Incentives are shown in this table but are treated as transfer payments and do not impact calculation of TRC costs. PY4 Total Resource Cost Test Assumptions - Final Page 9

14 Of note, when comparing the sum of the program specific values and the summary file that ComEd provided, the summary file was in line with the program specific calculations perform in DSMore. 3.2 Discrepancies between Evaluated and DSMore Ex-Post Net Energy Savings In comparing the first year ex-post net energy savings that Navigant estimated and the implied first year energy savings used in DSMore, Navigant compared the values as listed in Table 5 below. This review found all of the savings values used in DSMore to be in agreement with Navigant estimates. Program Table 5 - Navigant Evaluated vs. DSMore Implied Ex-Post Net Savings (MWh) Navigant Evaluated Ex-Post Net Savings DSMore Ex-Post Net Savings Difference % Change Lighting Discounts 319, , % Home Energy Report 66,176 66, % Fridge Freezer Recycle Rewards 72,302 72, % Multi-Family Home Performance 9,456 9, % Single Family Home Performance % Clothes Washer Rebates 2,511 2, % CACES 2,571 2, % Elementary Education % Complete System Replacement % Business Prescriptive 234, , % Business Custom 23,892 23, % Mid-stream C&I Lighting 63,358 63, % C&I Retro-Commissioning 25,021 25, % C&I New Construction 10,400 10, % Compressed Air 2,997 2, % Small Business 9,009 9, % Data Centers 1,840 1, % C&R IP Thermostats % Carryover 99,888 99, % ComEd PY4 Portfolio 944, , % 3.3 Program Specific Data Review Amongst the Program Specific data that were used in TRC calculation, several were based on ComEd s internal tracking system of its conservation related expenditures. These include implementation, utility admin and utility incentive costs. Implementation and incentives costs are tracked by program, where utility admin costs were allocated to each program based on a survey of ComEd s energy efficiency staff. This approach seems reasonable and we therefore see no reason to doubt that these costs are accurate and reasonable. The remaining data points that were provided by ComEd in the TRC evaluation were the Measure Life and Incremental Costs. The Measure Life determines how long the energy and demand savings from any one measure will last. The Incremental costs are the costs associated with participating in the program, PY4 Total Resource Cost Test Assumptions - Final Page 10

15 before accounting for any incentives. In most cases, these costs are the difference between the more energy efficient measure purchased due to participation in the energy efficiency program and the baseline measure costs, which is what the participant would presumably have bought in absence of the program. In some instances, the baseline measure is to not install any measure, such as for attic insulation. In these instances, the incremental cost is the full cost of the measure. In rebate programs, participants generally pay a portion of the incremental costs in contrast with direct install programs where the utility generally pays most or all of the incremental costs. In some cases, like refrigerator retirement programs, there are no participant incremental costs. In all these cases, the participant incremental costs should be included in the TRC calculation if nonzero. The rest of this document provides the program specific values used to calculate the program specific TRC and assess the reasonableness of the data points determined by ComEd that were used in DSMore to calculate cost effectiveness. 3.4 Residential Lighting Program Measure Life Table 6 - TRC Components for Residential Lighting Program ($ in 000 s) Measure Life years Ex-Post Gross Savings (MWh) 533,162 Ex-Post Gross Savings (kw) 62,676 Ex-Post Net Savings (MWh) 319,243 Ex-Post Net Savings (kw) 37,529 Avoided Electric Production $ 42,980 Avoided Electric Capacity $ 4,290 Avoided T&D Electric $ 1,819 Avoided Ancillary $ 1,827 NPV of Replacement Costs $ 50,778 Administration Costs $ 140 Implementation Costs $ 2,494 EM&V / Outreach / Advertising $ 477 Utility Incentive Costs $ 15,769 Gross Participant Costs $ 30,912 Net Participant Costs $ 18,517 Total TRC Benefits $ 101,695 Total TRC Costs $ 21,628 TRC Test 4.70 A range of effective useful lives were used for this program based on the number of standard versus specialty CFLs sold and the proportion that ended up in residential versus commercial sockets. The later matters to the extent that bulbs installed in residential sockets have a lower hours of use (HOU) on average, and therefore have a longer effective useful life (EUL). The EUL used for each permutation agrees with the values provided in the Illinois Technical Reference Manual (IL TRM) and is appropriate for this analysis. PY4 Total Resource Cost Test Assumptions - Final Page 11

16 3.4.2 Participant/Incremental Costs Participant costs of $2.47 per bulb were used for bulbs ending up in residential sockets and $2.00 per bulb was used for those ending up in commercial sockets. The former represents a weighted average of the pre-incentive cost of standard and specialty bulbs included in this program. The later represents the implied progressive of incremental costs stated in the ILTRM. Both of these approaches and the resulting values are reasonable. Navigant notes that based on the mix of standard and specialty bulbs incented through the program, the incremental cost utilized for residential bulbs is somewhat higher than what is implied by the IL TRM. Therefore, the participant costs used in the TRC calculations could be conservative Load Shape For the Residential Lighting Program, approximately 5% of bulbs were found to have been installed in non-residential locations. Therefore, a mix of residential and small commercial load shapes were used for this program in proportion to the estimated number of bulbs that ended up in each market. The proportional use of these load curves accurately accounts for the different savings amounts and avoided costs that can be expected from these bulbs. The methodology used is appropriate given the cross-cutting sales from this program Incentives Incentives in this program were paid primarily to the retailers on bulbs sold and additionally there were a small amount of coupons made available to end consumers. The incentives offset a portion of the incremental costs. 3.5 Fridge Freezer Recycle Rewards Program Table 7 - IL TRC Components for Fridge Freezer Recycle Rewards ($ in 000 s) Measure Life 8 Ex-Post Gross Savings (MWh) 97,039 Ex-Post Gross Savings (kw) 14,800 Ex-Post Net Savings (MWh) 72,302 Ex-Post Net Savings (kw) 11,000 Avoided Electric Production $ 19,012 Avoided Electric Capacity $ 3,014 Avoided T&D Electric $ 739 Avoided Ancillary $ 593 Administration Costs $ 104 Implementation Costs $ 4,312 EM&V / Outreach / Advertising $ 1,854 Utility Incentive Costs $ 2,039 Gross Participant Costs $ 0 Net Participant Costs $ 0 Total IL TRC Benefits $ 23,357 Total IL TRC Costs $ 6,270 IL TRC Test 3.72 PY4 Total Resource Cost Test Assumptions - Final Page 12

17 3.5.1 Measure Life A measure life of eight years was used for this program, which is consistent with a 2010 analysis conducted by the Vermont Energy Investment Corporation (VEIC) for the Northeastern Energy Efficiency Partnerships (NEEP), but is longer than the five years included in the California Public Utility Commission s (CPUC) Database for Energy Efficiency Resources (DEER). Thus, the measure life of 8 years falls within the range of reasonable input values. However, given the longer history of refrigerator retirement programs in California, the VEIC measure life is more appropriate for Illinois Participant/Incremental Costs Participants do not bear any costs to participate in this program Load Shape The residential load shape that was used for this program is appropriate for the programs target market, residential appliance retirement Incentives Incentives were paid to residential home owners who allowed ComEd to pick up and retire their old appliances. 3.6 Clothes Washer Rebate Program Table 8 - IL TRC Components for Clothes Washer Rebate Program ($ in 000 s) Measure Life 11 Ex-Post Gross Savings (MWh) 3,704 Ex-Post Gross Savings (kw) 477 Ex-Post Net Savings (MWh) 2,511 Ex-Post Net Savings (kw) 323 Avoided Electric Production 896 Avoided Electric Capacity 125 Avoided T&D Electric 28 Avoided Ancillary 24 Administration Costs 35 Implementation Costs 298 EM&V / Outreach / Advertising 129 Utility Incentive Costs 1,610 Gross Participant Costs 2,146 Net Participant Costs 1,455 Total IL TRC Benefits 1, ,395 in reduced arrears Total IL TRC Costs 1,918 IL TRC Test 3.28 PY4 Total Resource Cost Test Assumptions - Final Page 13

18 3.6.1 Measure Life The California Public Utility Commission s Database for Energy Efficiency Resources (DEER) lists the useful life at eleven years for an energy efficient clothes washer. 4 Therefore, the measure life used is the DSMore calculation is reasonable Participant/Incremental Costs Participants incremental costs is $100 for participating in this program Load Shape A residential load shape was used for this program and is therefore appropriate for the target market of this program Incentives Incentives are provided to participants in the form of rebates that reduce the incremental cost for installing an energy efficient clothes washer Other Benefits The Clothes Washer Rebate Program was the only ComEd program to claim benefits from gas savings as well as reduced customer water usage (claimed in the form of reduced ratepayer arrears). The savings amounts of 7.92 CCF for gas and $33.47 in per participant water savings are taken from the ComEd 3-year filing plan. 4 DEER database available here: PY4 Total Resource Cost Test Assumptions - Final Page 14

19 3.7 Joint Residential Multi-family All Electric Table 9 - IL TRC Components for Residential Multi-Family Joint Program ($ in 000 s) Measure Life Measure Life 6-10 Ex-Post Gross Savings (MWh) 11,446 Ex-Post Gross Savings (kw) 1,142 Ex-Post Net Savings (MWh) 9,456 Ex-Post Net Savings (kw) 937 Avoided Electric Production $ 1,566 Avoided Electric Capacity $ 126 Avoided T&D Electric $ 39 Avoided Ancillary $ 30 NPV of Replacement Costs $ 914 Administration Costs $ 88 Implementation Costs $ 209 EM&V / Outreach / Advertising $ 36 Utility Incentive Costs $ 1,266 Gross Participant Costs $ 396 Net Participant Costs $ 329 Total IL TRC Benefits $ 2,676 Total IL TRC Costs $ 662 IL TRC Test 4.04 A measure life of six years was used for the standard CFLs installed through this program, nine years for aerators, and 10 years for showerheads. Each of these assumptions is consistent with the expected measure lives provided in the IL TRM. Additionally, the California Public Utility Commission s Database for Energy Efficiency Resources (DEER) lists the useful life as ten years for aerators and showerheads and four to eight years for CFLs depending on the manufacturers rated life. 5 As such, the measure lives utilized for each measure are reasonable and fall within the range of lifetimes used for other cost effectiveness calculations Participant/Incremental Costs This program is a direct install program where participants do not bear any costs to participate, however the appropriate, program-specific incremental costs are included as part of the program implementation/participation costs paid for by the utility Load Shape A residential multi-family load shape was used for this program and is therefore appropriate Incentives Incentives were not paid to participants but were provided in the form of measures installed. In terms of the TRC calculation, by including these costs as implementation costs, 100% of the measure cost is 5 DEER database available here: PY4 Total Resource Cost Test Assumptions - Final Page 15

20 included as a cost in the TRC calculation. This is appropriate because in absence of the program these measures would not have been installed and therefore the full cost of the measure should be included. 3.8 Single Family Home Performance This program was a direct install program and included an energy audit of participant s homes. Measures installed included CFLs, faucet aerators, hot water pipe insulation, low flow showerheads, water heater turndown and an energy survey Measure Life Table 10 - IL TRC Components for Single Family Joint Program ($ in 000 s) Measure Life 9 Ex-Post Gross Savings (MWh) 574 Ex-Post Gross Savings (kw) 40 Ex-Post Net Savings (MWh) 468 Ex-Post Net Savings (kw) 32 Avoided Electric Production $ 140 Avoided Electric Capacity $ 10 Avoided T&D Electric $ 2 Avoided Ancillary $ 2 Administration Costs $ 88 Implementation Costs $ 190 EM&V / Outreach / Advertising $ 64 Utility Incentive Costs $ 123 Gross Participant Costs $ 137 Net Participant Costs $ 112 Total IL TRC Benefits $ 154 Total IL TRC Costs $ 453 IL TRC Test 0.34 A measure life of nine years was used for this program, which installed faucet and shower aerators, pipe insulation, water heater turndown as well as CFLs. The California Public Utility Commission s Database for Energy Efficiency Resources (DEER) lists the useful life at ten years for aerators and four to eight years for CFLs depending on the manufacturers rated life, and eleven to thirteen years for pipe insulation. 6 Ideally, a weighted average measure life would be calculated based on the electricity savings generated by each measure type installed through the program. However, the utilized measure life of nine years is reasonable given the range of measures lives for the installed measures Participant/Incremental Costs Participant costs used in DSMore are $ per participant. This represents ComEd s portion (25%) of average participant cost incurred. Participant costs include the required participant co-payment, and represent a cost that they would not have incurred in absence of the program. 6 DEER database available here: PY4 Total Resource Cost Test Assumptions - Final Page 16

21 3.8.3 Load Shape Residential single family load shapes were used to evaluate cost effectiveness and are appropriate given the target market for this program Incentives Incentives were not paid to participants but were provided in the form of measures installed and the remaining cost of the energy audit. In terms of the TRC calculation, by including these costs as implementation costs, 100% of the measure cost is included as a cost in the TRC calculation. This is appropriate because in absence of the program these measures would not have been installed and therefore the full cost of the measure should be included. 3.9 Elementary Education Program The Elementary Energy Education (EEE) program is jointly offered by Nicor Gas and Commonwealth Edison (ComEd) who engaged National Energy Foundation (NEF) to implement the program. The program targeted 5 th grade students in public and large private schools that are customers of Nicor Gas or jointly Nicor Gas and ComEd Measure Life Table 11 IL TRC Components for Elementary Education Program ($ in 000 s) Measure Life 8.25 years Ex-Post Gross Savings (MWh) 634 Ex-Post Gross Savings (kw) 57 Ex-Post Net Savings (MWh) 479 Ex-Post Net Savings (kw) 45 Avoided Electric Production $ 126 Avoided Electric Capacity $ 12 Avoided T&D Electric $ 3 Avoided Ancillary $ 2 Administration Costs $ 28 Implementation Costs $ 76 EM&V / Outreach / Advertising $ 1 Utility Incentive Costs $ 22 Gross Participant Costs $ 0 Net Participant Costs $ 0 Total IL TRC Benefits $ 143 Total IL TRC Costs $ 105 IL TRC Test 1.36 The measure life used for savings included in this program was 8.25 years. This measure life is a simple average of the measures included in the program. The California Public Utility Commission s Database for Energy Efficiency Resources (DEER) lists the useful life at ten years for aerators, sixteen years for LED nightlights, and four to eight years for CFLs depending on the manufacturers rated life. Thus, the measure life of 8.25 years used for the program is appropriate. However, using a weighted average PY4 Total Resource Cost Test Assumptions - Final Page 17

22 measure life based on the proportional savings from each measure would more accurately capture the life of savings from measures included in this program Participant/Incremental Costs Participants do not bear any costs to participate in this program Load Shape Residential single family load shapes were used to evaluate cost effectiveness and are appropriate given the target market for this program Incentives There are no incentives paid directly to participants in this program. A small incentive of $100 is paid to each class to encourage the return of home report cards. These incentives have a minimal impact on the UCT test, but are not included in the Illinois TRC test The Central Air Conditioning Efficiency Services (CACES) The Central Air Conditioning Efficiency Services (CACES) program consists of two distinct programs serving different markets through a common marketing and delivery infrastructure. The Diagnostics and Tune-Up program targets improved efficiency for existing residential air conditioning equipment. The Quality Installation program addresses high-efficiency equipment installations for new and replacement air conditioning equipment, including additional incentives for high SEER units Measure Life Table 12 - IL TRC Components for CACES Program ($ in 000 s) Measure Life 5 Ex-Post Gross Savings (MWh) 2,571 Ex-Post Gross Savings (kw) 3,540 Ex-Post Net Savings (MWh) 2,571 Ex-Post Net Savings (kw) 3,540 Avoided Electric Production $ 552 Avoided Electric Capacity $ 563 Avoided T&D Electric $ 169 Avoided Ancillary $ 20 Administration Costs $ 35 Implementation Costs $ 1,038 EM&V / Outreach / Advertising $ 23 Utility Incentive Costs $ 0 Gross Participant Costs $ 629 Net Participant Costs $ 629 Total IL TRC Benefits $ 1,304 Total IL TRC Costs $ 1,724 IL TRC Test 0.76 Measure life was five years for the entirety of the program. For the diagnostics and tune-up portion of the program, five years is within the range of what Navigant has seen for similar programs in other PY4 Total Resource Cost Test Assumptions - Final Page 18

23 jurisdictions. For the Quality Installation portion of the program, the CPUC DEER database lists a EUL of 15 years. Since the CACES Program performed nearly ten times as many diagnostics and tune-ups as compared to quality installations, a measure life of 5 years is a reasonable, though conservative, measure life for the program Participant/Incremental Costs There are no participant costs included in DSMore for this program. The participant costs associated with this program are those incurred by the contractor for the purchase of diagnostic and Service Assistant equipment needed to conduct the diagnosis and tune-up of air conditioning equipment or the equipment required to conduct the quality installations. There was a total of $629,000 in participant costs. These costs should be included in the program level TRC, however their relative cost is likely to be small and not expected to make a material difference on the TRC analysis. This program shared the same installation team as the Diagnostics and Tune-Up Program. The equipment costs that were paid for by the installers in order to conduct the installations to the required specifications, should be included in the program level TRC, to the extent that the same equipment was used to conduct both programs, these costs should be divided amongst them Load Shape Residential single family load shapes were used to evaluate cost effectiveness and are appropriate given the target market for this program Incentives The incentives in this program are provided to participating HVAC contractors due to costs associated with using the diagnostic tool and the extra time required to adhere to the protocols needed to conduct the analysis. PY4 Total Resource Cost Test Assumptions - Final Page 19

24 3.11 Home Energy Report Measure Life Table 13 - IL TRC Components for Home Energy Report ($ in 000 s) Measure Life 1 Ex-Post Gross Savings (MWh) 66,176 Ex-Post Gross Savings (kw) 0 Ex-Post Net Savings (MWh) 66,176 Ex-Post Net Savings (kw) 0 Avoided Electric Production $ 2,186 Avoided Electric Capacity $ 130 Avoided T&D Electric $ 201 Avoided Ancillary $ 95 Administration Costs $ 140 Implementation Costs $ 2,446 EM&V / Outreach / Advertising $ 171 Utility Incentive Costs $ 0 Gross Participant Costs $ 0 Net Participant Costs $ 0 Total IL TRC Benefits $ 2,612 Total IL TRC Costs $ 2,756 IL TRC Test 0.95 A measure life of one year is used for this program, which is appropriate given that is an informational and behavior based program. A persistence analysis may show that savings would continue even were the reports to cease, implying a measure life greater than 1 year. However, in the absence of research showing this finding, a 1 year measure life is reasonable Participant/Incremental Costs These costs are included as zero in the program DSMore. However, it is unknown if participants made any investments in energy efficient devices to help them reduce energy use as a result of the information they received due to the program. The costs associated with any such investments would ideally be included in the TRC test for this program. However, gathering this information from participants would likely be logistically difficult and cost prohibitive Load Shape The residential load shape used for this program s evaluation is appropriate given its target market Incentives There are no incentives paid directly to participants in this program Complete System Replacement The Complete System Replacement (CSR) program offers education and cash incentives to ComEd s, Nicor Gas, North Shore Gas, and Peoples Gas residential customers to encourage customer purchases of higher efficiency equipment in conjunction with the Home Energy Efficiency Rebate (HEER) Program PY4 Total Resource Cost Test Assumptions - Final Page 20

25 and North Shore Gas and Peoples Gas Residential Prescriptive Rebate (RPR) Program this is program that is jointly implemented by the utilities. Table 14 - TRC Components for Complete System Replacement Program ($ in 000 s) Measure Life Measure Life 18 Ex-Post Gross Savings (MWh) 638 Ex-Post Gross Savings (kw) 850 Ex-Post Net Savings (MWh) 377 Ex-Post Net Savings (kw) 502 Avoided Electric Production $ 262 Avoided Electric Capacity $ 311 Avoided T&D Electric $ 62 Avoided Ancillary $ 23 Administration Costs $ 115 Implementation Costs $ 125 EM&V / Outreach / Advertising $ 38 Utility Incentive Costs $ 832 Gross Participant Costs $ 538 Net Participant Costs $ 317 Total IL TRC Benefits $ 658 Total IL TRC Costs $ 595 IL TRC Test 1.11 The California Public Utility Commission s Database for Energy Efficiency Resources (DEER) lists the useful lives ranging from 15 years to 20 years for measures that might be installed via the CSR program, including high efficiency furnaces, high efficiency air conditioners, package and split systems, and high efficiency heat pumps. Thus, the measure life of 18 years used for the program is reasonable Participant/Incremental Costs The DSMore calculation uses a one-time customer cost of $262. This amount was calculated based on the TRM cost of switching from a SEER 13 system to SEER 15.2 at a value of $119 per ton. This is a sound method for determining customer incremental cost and the result is reasonable for the TRC analysis Load Shape The residential load shape used for this program s evaluation is appropriate given the customer base that is targeted by the program Incentives Incentives for the CSR program are paid directly to participants in the form of rebates to eligible customers who install systems matching program criteria. PY4 Total Resource Cost Test Assumptions - Final Page 21

26 3.13 C&I Prescriptive Program Measure Life Table 15 - IL TRC Components for C&I Prescriptive Program ($ in 000 s) Measure Life 12 Ex-Post Gross Savings (MWh) 316,379 Ex-Post Gross Savings (kw) 43,177 Ex-Post Net Savings (MWh) 234,120 Ex-Post Net Savings (kw) 43,177 Avoided Electric Production $ 89,570 Avoided Electric Capacity $ 14,149 Avoided T&D Electric $ 3,112 Avoided Ancillary $ 2,520 Administration Costs $ 618 Implementation Costs $ 7,065 EM&V / Outreach / Advertising $ 4,247 Utility Incentive Costs $ 24,442 Gross Participant Costs $ 97,767 Net Participant Costs $ 72,347 Total IL TRC Benefits $ 109,351 Total IL TRC Costs $ 84,277 IL TRC Test 1.30 There are a variety of measures included in the C&I prescriptive program with measure lives ranging from three to eighteen years. As part of its program evaluation activities Navigant conducted an engineering review and analysis of measure savings based on project documentation, default assumptions and tracking data and found the assumptions to be reasonable. Navigant conducted a further analysis of the tracking data base and found that the weighted average measure life was similar to the 12 year measure life used by ComEd in its DSMore analysis of this program, though ComEd s value is slightly conservative. The measure lives for individual measures were based on references including DEER, other utilities, third party reports or KEMA s experience from earlier program years. These sources are regularly used in energy efficiency program evaluation and therefore the individual measure lives are reasonable Participant/Incremental Costs Navigant s engineering review of a sample of projects also included reviewing the Workpapers that accompanied them. These workpapers included incremental costs based on third party references, like DEER, other utilities, third party reports or KEMA s experience. Overall, these costs are reasonable Load Shape A business load shape was used for this program and is appropriate given the broad mix of measures and target market Incentives Incentives were paid to participants and covered 25% of the incremental participant costs. PY4 Total Resource Cost Test Assumptions - Final Page 22

27 3.14 C&I Custom Program Measure Life Table 16 - IL TRC Components for C&I Custom Program ($ in 000 s) Measure Life 12 Ex-Post Gross Savings (MWh) 31,437 Ex-Post Gross Savings (kw) 2,858 Ex-Post Net Savings (MWh) 23,892 Ex-Post Net Savings (kw) 2,172 Avoided Electric Production $ 8,987 Avoided Electric Capacity $ 956 Avoided T&D Electric $ 215 Avoided Ancillary $ 171 Administration Costs $ 560 Implementation Costs $ 150 EM&V / Outreach / Advertising $ 330 Utility Incentive Costs $ 2,612 Gross Participant Costs $ 10,448 Net Participant Costs $ 7,941 Total IL TRC Benefits $ 10,329 Total IL TRC Costs $ 8,981 IL TRC Test 1.15 Similarly to the C&I Prescriptive program, there were a number of measures included in this program with measure lives varying from one to twenty-six years. The weighted average measure life of the savings was also similar to the 12 year measure life used by ComEd in its DSMore analysis. Measure life data for this program was based on information provided by participants and reviewed by the program implementer, KEMA, for reasonableness. This approach is sound Participant/Incremental Costs Incremental cost data was provided by participants as part of their application for this program. Both the efficient measure and baseline costs are requested when completing an application to this program and these costs are reviewed by the program implementer KEMA for reasonableness before being submitted. This approach is sound Load Shape A business load shape was used for this program and is appropriate given the broad mix of measures and target market Incentives Incentives were paid to participants and covered 25% of the incremental participant costs. PY4 Total Resource Cost Test Assumptions - Final Page 23

28 3.15 Midstream Lighting Program Measure Life Table 17 - TRC Components for Midstream Lighting Program ($ in 000 s) Measure Life 3 years Ex-Post Gross Savings (MWh) 101,230 Ex-Post Gross Savings (kw) 17,000 Ex-Post Net Savings (MWh) 63,358 Ex-Post Net Savings (kw) 10,700 Avoided Electric Production $ 5,957 Avoided Electric Capacity $ 664 Avoided T&D Electric $ 311 Avoided Ancillary $ 206 Administration Costs $ 88 Implementation Costs $ 546 EM&V / Outreach / Advertising $ 98 Utility Incentive Costs $ 2,126 Gross Participant Costs $ 1,151 Net Participant Costs $ 720 Total TRC Benefits $ 7,139 Total TRC Costs $ 1,452 TRC Test 4.92 The measure life of 3 years used for this program is appropriate based on the lifetime of the CFLs incented through the program and the typical hours of use for the commercial establishments into which the bulbs are to be installed. This method for determining the useful life of commercial CFLs is corroborated by DEER Participant/Incremental Costs Participant costs of $2.00 per bulb were used. This value is from the TRM and is appropriate for this program Load Shape The all commercial load shape was used for this program which is appropriate given the target market for the program Incentives Incentives in this program were paid primarily to the retailers and distributors on bulbs sold. The incentives offset a portion of the incremental costs. PY4 Total Resource Cost Test Assumptions - Final Page 24

29 3.16 C&I Retro Commissioning Program Table 18 - IL TRC Components for C&I Retro Commissioning Program ($ in 000 s) Measure Life Measure Life 5 Ex-Post Gross Savings (MWh) 27,315 Ex-Post Gross Savings (kw) 384 Ex-Post Net Savings (MWh) 25,021 Ex-Post Net Savings (kw) 352 Avoided Electric Production $ 3,799 Avoided Electric Capacity $ 55 Avoided T&D Electric $ 17 Avoided Ancillary $ 11 Administration Costs $ 88 Implementation Costs $ 1,654 EM&V / Outreach / Advertising $ 220 Utility Incentive Costs $ 2,877 Gross Participant Costs $ 690 Net Participant Costs $ 632 Total IL TRC Benefits $ 3,882 Total IL TRC Costs $ 2,594 IL TRC Test 1.50 Guidelines published for a Retro-Commissioning program run by Pacific Gas and Electric Company in 2010 listed 3 years as the effective measure life (EUL) for the resetting of HVAC controls and 5 years for recoding HVAC controls, 7 both of which are key components of the Retro-Commissioning Program. For the installation of controls, a measure life longer than 5 years is not uncommon. Additionally, the 5 year measure life assumed is that same as that used by the gas utility jointly implementing the Retro- Commissioning Program. Therefore, Navigant feels that the assumed 5 year measure life is appropriate Participant/Incremental Costs Incremental measure costs were determined during the EM&V process and are reasonable. ComEd s portion of the participant costs for this jointly implemented program is based upon utility agreed allocation percentages Load Shape The large C&I class was used for this program, which is consistent with the targeted population for the program Incentives The incentives cover the full cost of the study and a portion of the retro-commissioning costs and are paid on behalf of the participants. 7 RCx Project Submittal Guidelines. Pacific Gas and Electric Company. November PY4 Total Resource Cost Test Assumptions - Final Page 25